The Fed official who cried 'bubble' long before it burst


Jerry Jordan got it right.

LAST summer, Fed Chairman Alan Greenspan claimed "it was very difficult to definitively identify" the late-1990s stock bubble until it was too late to do anything about it.

Perhaps it was, for Alan. But one of his colleagues in the sanctum sanctorum of U.S. monetary policy saw the bubble early, saw it for what it was and urged Greenspan and the other money shamans to attack it.

"Apparently I am not as convinced as others that the problems to which we ultimately will have to react will be consumer prices," Jerry L. Jordan admonished his colleagues on the Federal Open Market Committee on Nov. 11, 1997.

"The problem may ... be ... in asset [stock] markets, as suggested by historical episodes in this country, notably in the 1920s, and in Japan in the late 1980s."

We know what Jordan said because the Fed's hermetic deliberations are taped and delivered up as transcripts five years after the fact. The 1997 texts surfaced Thursday, and they show that, at least in the middle stages of stock mania, Jordan repeatedly warned of a coming bubble, to no effect.